BVRLA responds to latest motor finance forbearance guidelines

The BVRLA has recently responded to the Financial Conduct Authority (FCA)’s consultation on new Consumer Credit and Coronavirus: Additional Guidance for Firms.

This guidance applies in the exceptional circumstances arising out of the Covid-19 pandemic and its impact on the financial situation of consumer credit customers. 

The regulator is proposing that: 

  • those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total 
  • those who currently have an initial payment deferral, will be eligible for a further payment deferral of up to three months 
  • borrowers would have until 31 January 2021 to request an initial payment deferral 
  • a payment deferral under would not be reported as missed payments on a borrower’s credit file. 

The guidance has a general section and motor finance specific provisions.  

Although the consultation period was very short, the BVRLA engaged with members to give a full response.  

Members had several concerns and areas they requested clarity on:  

  • A call for clear communication from the FCA about eligibility for the forbearance measures. They are only open to consumers, and specifically those who have either not had a payment deferral or experienced only one payment deferral and not resumed full repayments.  
  • Clarity on how the FCA will respond if the current national restrictions are extended or reintroduced in 2021.  
  • Concerns around non-bank lender liquidity and how these measures could make it even harder for them to access the finance they need for their businesses. More support is needed for these firms. 
  • Greater clarity in the actual guidance around the lack of eligibility of those who have resumed full payment after an initial payment holiday. 
  • Clearer wording around the section on repossessions in the general guidance. The wording as it stands now is too open to misinterpretation and does not mention voluntary terminations.  

View the full consultation response.